Volkswagen forms cooperation with Ford in South America

Oct-86

Introduction:

South America's unstable economic development and high inflation results in losses for Volkswagen's Brazilian and Argentinean subsidiaries. Volkswagen Brasil stops producing the Beetle in October 1986 as the government introduces price controls. In order to safeguard its involvement in South America without the necessity of making unlimited new investments and to reduce risk, a cooperation with Ford is agreed in October 1986. By establishing "AUTOLATINA", the two manufacturers combine their Brazilian activities under a joint holding company. Volkswagen takes responsibility for technical matters and Ford concentrates on financial matters. Both companies remain legally independent firms and continue operations for their own brands. The cooperation between Volkswagen and Ford results in a second joint venture in Portugal in 1991, where a capital and risk sharing enterprise would be set up to produce a multi-purpose vehicle for the European market. After the Brazilian market is opened for car imports, Ford and Volkswagen end their cooperation in April 1995: The contractual separation of the companies is completed on December 1 of the same year in Brazil and on January 1, 1996 in Argentina.